Global Tax Alert | 28 February 2014

ECJ issues decision on Spanish Tax on Retail Sale of Certain Hydrocarbons

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The European Court of Justice (ECJ) ruled on 27 February 2014, in the Case C-82/12 that the Spanish Tax on Retail Sales of Certain Hydrocarbons, best-known in Spanish as “céntimo sanitario,” is not compatible with the Directive on Excise Duties which prevents EU Member States from introducing or maintaining taxes on hydrocarbons which do not have a specific purpose and have a purely budgetary objective.


In 2002, the Spanish Tax on Retail Sales of Certain Hydrocarbons, an indirect tax applicable on retail sales of fuel (mainly gasoline and gas oil) was introduced, with the objective of funding the Spanish Autonomous Regions' budget for health-care and environmental expenses. The tax was abolished effective 1 January 2013.

Article 3, paragraph 2 of the Directive 92/12/EEC (Directive on Excise Duties) authorizes Member States to introduce new taxes, or to maintain the existing ones, on products subject to excise duties, as it is the case of fuel, if such other taxes comply with the following requirements: i) they must have a specific purpose and ii) they must comply with the tax rules applicable for excise duty and VAT purposes as far as determination of the tax base, calculation of the tax, chargeability and monitoring of the tax are concerned.

The ECJ's reasoning

In its decision, the ECJ analyzes whether the Spanish tax complies with the Directive on Excise Duties' requirements.

When considering the “specific purpose” requirement, the ECJ case law has demanded that the indirect tax does not have a purely budgetary objective.

The ECJ recalls that the Tax on Retail Sales of Certain Hydrocarbons was established when certain powers in the field of health-care were transferred to the Spanish Autonomous Regions by the State. The aim of this new tax was to provide funds, at least partially, for the expenditure associated with these new powers. However, the Court points out, there is no reference in the decisions which have been made privy to the Court which suggest that the amounts collected by means of this tax must be allocated to specific health-care and/or environmental expenses. The Spanish tax, therefore, is not aimed at deterring the consumption of certain hydrocarbons, which would constitute per se a direct and specific purpose for a new tax as per the EU Directive, but rather to provide the Autonomous Regions with more funds, thus being a purely budgetary measure.

The ECJ concludes that the Directive on Excise Duties precludes national legislation that establishes a tax on the retail sale of mineral oils such as the Tax on Retail Sales of Certain Hydrocarbons if and to the extent that such tax cannot be regarded as pursuing a specific purpose within the meaning of the said Directive, where such a tax is intended to finance the exercise by the corresponding authorities of the powers in the fields of health and the environment, and not to directly protect the health and the environment.

As for the temporal effects of this decision, the Court considers that these cannot be limited despite the serious economic consequences that they will have for Spain. The Court is of the opinion that, when this tax was introduced there was no reasonable doubt regarding the meaning and the scope of the EU Law which is of application and that, consequently, the legislator did not act in good faith when introducing and further maintaining the application of this tax.

Practical consequences

In which cases can a refund be claimed?

The Spanish Tax on the Retail Sale of Certain Hydrocarbons has been declared contrary to EU Law and, as per the ECJ, the effects of this decision cannot be limited temporarily. As a result, taxpayers that have been subject to this indirect tax may request the refund from the tax authorities.

Who can claim the refund?

Taxpayers that have charged this tax to their end customers (basically retailers in the fuel market) are entitled to claim the refund. End-customers that have effectively borne the tax charged by the retailers are also entitled to claim for the refund (for instance, companies in the transportation business, both for goods and passengers, among others).

Which tax years are available for the refund claim?

Taxpayers can claim the refund of the amounts paid in any non-statute barred tax year (the Spanish statute of limitations period is set at four years), or of amounts which are currently being disputed in an administrative or judicial court. The ECJ decision is binding to all Spanish courts.

As for the taxes which were paid in tax years which are already time-barred, there may be grounds to sustain the right for a refund depending on the specific facts and circumstances of each case. Therefore, this would have to be analyzed on a case-by-case basis.

What is the amount of refund which can be claimed?

Taxpayers are entitled to claim the refund of the amount of tax paid under the Tax on Retail Sale of Certain Hydrocarbons, together with the delay interest which has accrued since such tax was unduly borne and until the refund is agreed.

For additional information with respect to this Alert, please contact the following:

Ernst & Young Abogados, Madrid
  • Javier Martín Martín
    +34 91 572 75 54
  • Pedro Silva
    +34 91 572 71 35
Ernst & Young LLP, Spanish Tax Desk, New York
  • Cristina de la Haba
    +1 212 773 8692

EYG no. CM4207